The Expert View: Standard Chartered, Ladbrokes and Carillion

Our daily round-up of analyst recommendations and commentary, featuring Standard Chartered, Ladbrokes, Carillion, BHP Billiton and Beazley.

Key stats
Market capitalisation	£42,729m
No. of shares out	2,411m
No. of shares floating	2,393m
No. of common shareholders	not stated
No. of employees	86918
Trading volume (10 day avg.)	3m
Turnover	10,688m USD
Profit before tax	3,060m USD
Earnings per share	1.28 USD
Cashflow per share	1.47 USD
Cash per share	12.80 USD

*Correct as at 19 Feb 2013

Morgan Stanley backs Standard Chartered over HSBC

Morgan Stanley analyst Chris Manners has raised his recommendation on Standard Chartered (STAN.L) to ‘overweight’, increasing his price target for the bank by 16% to £19.24.

'STAN is now our preferred name among the UK-Asian banks, vs. HSBC, as relative valuation hasreached parity,' he said. 'HSBC looks fairly valued on lower revenue growth expectations, while an improving Asian macro should reduce asset quality concerns for STAN, driving a performance reversal.'

He added that the weak performance of Standard Chartered shares in recent months presents an entry window for investors. 'Standard Chartered is now poised to outperform the index, in our view. We expect that as investors re-evaluate the asset quality risk from an Asian slowdown and focus on STAN’s appealing valuation, the stock could outperform,' he said.

Shares in the group closed at £17.69 on Tuesday, up 39.4p or 2.3%.

Key stats
Market capitalisation	£2,089m
No. of shares out	909m
No. of shares floating	890m
No. of common shareholders	not stated
No. of employees	15220
Trading volume (10 day avg.)	2m
Turnover	£976m
Profit before tax	£118m
Earnings per share	12.85p
Cashflow per share	18.39p
Cash per share	2.91p

*Correct as at 19 Feb 2013

Investec upgrades Ladbrokes to 'buy'

Investec analyst James Hollins has upgraded betting outfit Ladbrokes (LAD.L) from 'hold' to 'buy' based on what he believes is a promising outlook both online and on the high street.

'Ladbrokes is due to complete the roll out its new online sportsbook in Q1 and, compounded by internally generated trading improvements, the outlook in both retail and digital is promising,' he said. 'Ladbrokes should be putting the delay in its sportsbook relaunch behind it, although there is risk of an underwhelming performance if 2012 is used as a guide to future digital returns.'

Hollins said the growth of the high street operation is currently undervalued, and with this in mind he's upgraded his recommendation on the shares.

Shares in the group closed at 230p on Tuesday, up 8.9p or 4%.

Key stats
Market capitalisation	£1,354m
No. of shares out	430m
No. of shares floating	405m
No. of common shareholders	not stated
No. of employees	45000
Trading volume (10 day avg.)	1m
Turnover	£4,153m
Profit before tax	£135m
Earnings per share	31.79p
Cashflow per share	47.31p
Cash per share	115.04p

*Correct as at 19 Feb 2013

Berenberg Bank upgrades Carillion to 'buy'

Berenberg Bank analyst Chris Moore has upgraded construction business Carillion (CLLN.L) from 'hold' to 'buy' ahead of its full-year results at the end of the month.

Moore expects the results to be in line with guidance given at the December 2012 trading update, and he's lifted his target price from 280p to 370p to reflect this.

'Carillion is a cheap way to play structural growth in public sector outsourcing, which is finally showing signs of life,' he said. 'Over the past 12 months Carillion won its first two contracts, worth up to £850 million (7% of the support services order book) in the local authorities outsourcing space, and increased its live bids from three to five. Its support services pipeline, up 45% over the past two years, points to accelerating organic growth.'

The shares currently trade at 6.8x estimated 2014 earnings, he added, a 30% discount to the sector.

Shares in the group closed at 318.8p on Tuesday, up 13.6p or 4.5%.

Key stats
Market capitalisation	£119,300m
No. of shares out	5,324m
No. of shares floating	5,314m
No. of common shareholders	not stated
No. of employees	46370
Trading volume (10 day avg.)	4m
Turnover	46,706m USD
Profit before tax	9,970m USD
Earnings per share	1.86 USD
Cashflow per share	2.65 USD
Cash per share	0.62 USD

*Correct as at 19 Feb 2013

Canaccord predicts 5% divi hike for BHP Billiton

Mining giant BHP Billiton (BLT.L) won't report a loss today, Canaccord analyst Peter Mallin-Jones predicts.

Speaking ahead of today's first-half update from the firm, Mallin-Jones said impairments shouldn't be enough to swing the reported results into a loss, and he is expecting a 5% rise in the interim dividend to 60 cents.

'We expect management to highlight cost improvements and turnaround plans in the aluminium, manganese, metallurgical coal and nickel operations given the losses expected in these units,' he said. 'We will also look for status updates on the Jansen potash project and iron ore expansion plans.' The analyst has a 'hold' recommendation on the shares, and a £21.55p target price.

Shares in the group closed at £22.35 on Tuesday, up 15.5p or 0.7%.

Key stats
Market capitalisation	£1,104m
No. of shares out	521m
No. of shares floating	492m
No. of common shareholders	not stated
No. of employees	805
Trading volume (10 day avg.)	1m
Turnover	1,025m USD
Profit before tax	139m USD
Earnings per share	0.27 USD
Cashflow per share	0.29 USD
Cash per share	0.79 USD

*Correct as at 19 Feb 2013

Westhouse downgrades Beazley on share price strength

Westhouse analyst Joanna Parsons has dropped her recommendation on insurance specialist Beazley (BEZ.L) from 'buy' to 'add' following a strong period for the shares.

Parsons praised the group's record profits in the 2012 financial year and 8.4p special dividend. 'The momentum in Speciality Lines rates is particularly encouraging and, combined with a profitable short tail book, should see Beazley deliver,' she said. 'We raise our 2013/14E pre-tax profit forecast by 7% and 5% respectively, which drives our revised target price of 235p (+12.5%).'

However, her recommendation falls as the shares have gained 17% since the start of the year. Although the analyst isn't predicting another special dividend just yet, she did say she'd be monitoring its capital position.

Shares in the group closed at 197.9p on Tuesday, down 10.9p or 5.2%.